When the Great Depression enveloped the country, theater admissions fell by a third and many of the 23,000 movie theaters that existed in 1930, from neighborhood houses to "deluxers", were forced to close their doors. The ones that survived experimented with a "galaxy of appetizers" to attract audiences, from offering prizes that ranged from dishes and hams and automobiles, to including stage shows and vaudeville acts as part of the evening's entertainment. However, when small-time vaudeville lost its effectiveness, movie theaters experimented with two-for-one tickets and free ladies' matinees. But in the end, the exhibition feature that made the greatest impact on the industry was the "double feature", showing two movies for the price of one. Although this was not a new business strategy for the theaters, having been used in the past whenever income lagged, it now became an almost universal practice.

By 1935, 85% of American motion picture theaters were programming double features. A typical bill at this time lasted three hours or more, and included two features, cartoons, a newsreel, and previews of coming attractions. The "Big Five" Hollywood studios, each of which owned a theater chain at this time, found it especially difficult to satisfy the seemingly insatiable appetite of their theaters for new product.

The solution, they found, was to supply a prestige, big-budget film with a second inexpensive feature. The big-budget film, the "A" movie placed at the top of the marquee, would pull in audiences by using major stars, quality scripts and high production values. The second feature, the budget "B" movie, was an entertaining but quickly made, shorter film that usually used a studio's standing sets, revolved around a formulaic plot and fit into an identifiable, easy-to-make genre such as a "Western", "Comedy", "Gangster", "Newspaper", "Detective", "College", "Medical", or "Jungle" film, and eventually included "Horror" and "Film Noir".

Often called "cheapies", "quickies", "low-budget", or simply "budget films", from the early 1930s to the early 1950s these "B" movies played an important role in Hollywood, and roughly 75% of the pictures made during the 1930s alone (well over 4,000 films) are considered to be in this category.

The early "B" movies were produced by both the major Hollywood studios, some of which eventually set up specific B-units, and smaller companies that specialized in this type of film. They proved to be very popular, and occasionally were so successful that they spun off into a regular series: such as the "Andy Hardy" series, produced by M-G-M, which included 15 films from 1937 to 1947; and the "Sherlock Holmes" series, produced by Universal, which included 12 films from 1941 to 1946.

While the "A" film was rented to theaters for a percentage of the box office receipts, the "B" film was rented at a fixed rate that was cheaper for the theater and produced more predictable profits. In fact, some movie theaters in smaller communities found it more cost-effective to show two "B" movies together, instead of using an "A" and a "B" film for their double feature.

During the 1930s, the height of the "Golden Age" of Hollywood, each major studio was releasing, on average, one feature film every week of the year. Big-budget films, however, were the exception, and it was the "B" movie that filled out production schedules and fueled the engines of distribution and exhibition so that the studio's employees and facilities could remain active year-round.

Although the budget, script, shooting schedule and performers dictated which films would be "B" films at a major studio, a few "B's" turned out better than a studio's "A's".

But no matter how modest their budget, "B" films were never slapdash productions at the major studios. The steady revenue from "B" movies was often the difference between profit and loss, especially when a studio's big-budget films failed, and so "B" movies were used as a training ground for promising actors, directors, composers, and technicians, many of whom went on to become major personalities and influences. In addition, many talented and versatile actors appeared in both "A" and "B" films throughout their careers, floating back and forth between the two, while others, who were especially good at working in this restrictive medium, had very successful careers working exclusively in the "B's". These talented but unsung craftsmen, who could produce a quality product despite the imposed constraints of time and budget, were highly valued by the studios who often paid them generously. As Brian Taves points out in the book, "Grand Design", (1993) edited by Tino Balio, " the studio's prestige rested on the quality of their B's as well as their A's, with the frequent hope that a B might turn out well enough to be released as an A."

Don Miller, in his book, "B Movies", (1973, reprinted 1987), points out that there was also a film category during the 1930s considered to be somewhere between an "A" film and "B" film, called "programmers". These were productions made with a modest "B" budget that nevertheless attracted major audiences and box-office grosses on a par with "A" films. These films could be advertised at either the top or the bottom of a theater's double-feature bill, but usually received neither important press coverage nor critical disdain. Often dealing with prestigious or unusual topics, these "in-between" films were often used as a showcase for potential new stars.

Not surprisingly, this period also saw the emergence of small independent "indie" studios where "B" movies accounted for nearly all of their output. These so called "B" studios, which lacked their own exhibition outlets, included such companies as Mascot, Monogram, Grand National, and Republic Pictures Corporation whose sound department was so noted throughout the industry that they received a Special Technical Award fromthe Academy of Motion Picture Arts and Sciences in 1945. These studios produced everything from the "Mr. Wong" mysteries to Tex Ritter Westerns, and they farmed out their films to small-time, independent distributors on a regional basis.

Finally there were the "Poverty Row" production companies who kept indoor shots to a minimum, only renting costly studio space from other companies as needed. While using a lot of stock footage that they could obtain for little or nothing, they often made films, such as the ever popular "B" Western, in less than a week for a typical budget of less than $8,000. It was not uncommon for these quickie filmmakers to pre-sell their films in packages to small, independent exhibitors that were either in rural areas or occupied a poor urban location, and who often changed their bills two or three times a week to attract an audience. These were usually theaters that the major studios bypassed altogether. The "Poverty Row" companies (a term which referred to a distinct geographical area of Hollywood) included Ajax, Beacon, Empire, Victory, Weiss, and Lone Star Productions which became best known for producing a series of 16 Westerns starring John Wayne.

By the 1950s, however, the major studios had been forced to sell their theater chains and had stopped producing "B" movies, and most of the "Poverty Row" companies had either been absorbed by a larger studio or disappeared. After that, the term "B" movie began to be applied to any cheaply made, low quality film.